New base energy news issue 904 dated 10 august 2016

Copyright © 2015 NewBase www.hawkenergy.net Edited by Khaled Al Awadi – Energy Consultant All rights reserved. No part of this publication may be reproduced, redistributed,
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NewBase Energy News 10 August 2016 - Issue No. 904 Edited & Produced by: Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
UAE:Masdar’s Dudgeon project on track to be completed by end of 2017
Gulf News
Abu Dhabi: Masdar’s Dudgeon offshore wind energy project is 60 per cent complete and is set for
production in the first quarter of next year, a senior executive of Abu Dhabi-
based renewable energy company told Gulf News.
“Phase one of the project will commence by the end of the first quarter of
2017 and by the end of the year, it will be in full commercial operation,” said
Fawaz Al Muharrami, head of project delivery in Masdar.
The project, with a capacity of 402 megawatts, is being developed by Masdar in coordination with
Norwegian companies Statoil and Statkraft. The total investment is about £1.5 billion (Dh7.15
billion) and the plant is being constructed 32 kilometres from the North Norfolk coast of East
England.
This will be the second offshore wind project for the Abu Dhabi-based clean energy company in
the UK. Masdar is the co-owner of the 630 megawatt London Array, the world’s largest offshore
wind energy development which was inaugurated in 2013.

The completion of the Dudgeon wind farm will bring Masdar’s installed clean energy capacity in
the UK to more than 1 gigawatt, according to Al Muharrami. He said the company is looking for
more wind energy projects in the UK and elsewhere in Europe.
“We already have two offshore wind projects
in the UK. We are looking at different
opportunities in the country and if it matches
with our shareholders investment guidelines,
then we will invest more.”
“Offshore market is maturing and many
developers are interested and financing is
becoming easier. Apart from the UK, we are
also looking for projects in the Netherlands
and France.”
The clean energy company owned by
Mubadala group launched a major wind
project in Jordan in December
Tafila wind farm, a joint venture between Inframed, EPGE and Masdar, will account for almost 6.5
per cent of Jordan’s 1,800 megawatt (MW) renewable energy target for 2020.
The company is also looking to start a wind farm in Oman but is yet to receive guidelines from the
government to move ahead.
TAFILA WIND FARM
PROJECT DEVELOPMENT AND MODELLING
THE ROLE INCLUDED FINANCI AL MODELLING AND FUNDING ADVICE
FOR THE $287M PROJECT.
THE WIND FARM IS THE FIRST PRIVATELY FINANCED RENEWABLE
ENERGY PROJECT IN THE COUNTRY WITH FUNDS COMING FROM THE
IFC, INFRAMED, MASD AR AND EPGE.

Qatar, Saudi lead GCC fertiliser output, set to exceed 43MT by 2021
Gulf Times
Qatar, Saudi lead GCC fertiliser output region is set to expand by 14% to 43.1mn tonnes
over the next five years, spearheaded by Qatar and Saudi Arabia,
shows a new report by the Gulf Petrochemicals and Chemicals
Association (GPCA).
At 37.8mn tonnes, the GCC’s current fertiliser capacity earns
$6.3bn in sales revenue, according to the GPCA’s 2015 fertiliser
Indicators report. Additionally, capacity for this commodity has
nearly doubled since 2005 due to strong demand from export
markets, resulting in closer trade relationships with diverse
markets such as India, the United States and Brazil.
GPCA secretary-general Dr Abdulwahab al-Sadoun said: “Since 2005, the GCC has been the
epicentre of a dynamic fertiliser industry, whose growth has been driven by increased demand for
food, growing access to feedstock and the rise in global population. With the recent focus of
regional governments in developing their non-oil industries, fertilisers will continue to be a key
focus sector in the medium term.”
With a production capacity of 16.7mn tonnes and 9.8mn tonnes respectively, Saudi Arabia and
Qatar lead fertiliser production in the region.
However, with relatively flat demand from local and global markets for fertilisers, coupled with
macroeconomic volatility, challenges remain for regional producers, GPCA said.
“There is no doubt that GCC fertiliser producers are encountering aggressive competition from
producers with access to cheap feedstock as a result of the development of the shale gas in the
US and coal-based industries in China,” al-Sadoun explained.
“Being export-oriented industry with over 60% of the output destined for international markets,
regional companies must formulate and execute new strategies to ensure that their cost
leadership and supply chain costs are agile. Price competitiveness will ensure retaining and
expanding market share in the future.”
The fertiliser indicators report will be released at the GPCA Fertilizer Convention. Now in its 7th
edition, the conference will be held in Dubai from September 6 to 8.
With insights on the market outlook for commodities, to upcoming trends, the conference will host
regional and global experts from the fertiliser industry.

Oman: Deficit swells to RO 2.5 billion in five months
Oman Observer - Samuel Kutty
OIL TOLL: Except for customs duties and capital revenues, there has been across the board fall in
revenues from other sectors
On the back of lower revenue from the weakened oil prices, the Sultanate’s budget deficit swelled
to RO 2.540 billion in the first five months of the current year. The difference is 58.7 per cent
higher than the previous year when the deficit stood at RO 1.601 billion.
Except for customs duties and capital revenues, which rose 134.7 per cent and 26.9 per cent
respectively, there has been across the board fall in revenues from other sectors.
Net oil revenue plunged 44.7 per cent to RO 1.287 billion at the end of May from RO 2.325 billion
a year ago. Gas revenue dropped 8 per cent to RO 546.2 million from RO 594 million.
At the same time, NCSI data shows that interest on loans surged 110.1 per cent to RO 33.2
million till the end of May 2016 from RO 15.8 million a year ago. As far as the means of financing
is concerned, net loans registered a massive fall of 152.3 per cent.
The total expenditure also witnessed a drop of 7.9 per cent to RO 4.427 billion from RO 4.809
billion during the same period in 2015. As usual, civil ministries continued to take the lion’s share
RO 770 million up from its previous level of RO 579.1 million for its development expenditure.
Gas production expenditure also rose 33.6 per cent to RO 79.6 million from RO 59.6 million, while
oil production spending decreased by 43.6 per cent to RO 156.9 million from RO 278 million.
For Oman, the price of oil in 2015 was significantly lower than historical trend. In February 2016
the price of oil dropped to $34.59 a barrel, according to National Centre for Statistics and
Information (NCSI).

However, the oil price for Oman’s crude has exceeded $40 in May 2016 and continues to
increase.
The Central Bank of Oman projects that the government revenues may decrease by 25.9 per cent
to RO 8,600 million in 2016 from the previous year’s budgeted revenues of RO 11,600 million,
aggregate expenditure is expected to drop by 15.6 per cent to RO 11,900 million from RO 14,100
million during the same period.
On the basis of assumed price for Omani crude in the budget for 2016, the overall fiscal deficit has
been budgeted at RO 3,300 million in 2016. The government’s original 2016 budget plan
envisaged state expenditure of RO 11.9 billion and revenues at RO 8.6 billion.
According to 2016 economic plans, the average oil price is assumed at $45 a barrel. “In order to
contain fiscal metrics within manageable limits, the authorities have implemented fiscal
adjustments through spending cuts, augmenting non-oil revenues and undertaking subsidy
reforms”, the apex bank said.
Oman power sector subsidy projected at RO 495m in 2016
Subsidy provided by the Omani government towards the supply of electricity to consumers across
the Sultanate is estimated to total RO 495.6 million during 2016. This compares with an amount of
RO 454.4 million in financial support extended by the government to the sector in 2015, according
to the Authority for Electricity Regulation Oman.
Article (18) of the Sector Law enshrines a mechanism through which the Ministry of Finance
provides electricity subsidy calculated by the regulator to licensed suppliers on an annual basis.
The Authority undertakes separate calculations on the subsidy required by the three electricity
distributors that are part of the Main Interconnected System (MIS) — Muscat Electricity
Distribution Company (MEDC), Majan Electricity, and Mazoon Electricity; the Rural Areas
Electricity Company (RAECO); and Dhofar Power Company.
Subsidy is calculated as the difference between the economic cost of electricity supply (including
financing costs) and revenues collected from customers.

According to the regulator, subsidy for the Main Interconnected System (which covers much of the
northern half of the Sultanate) is estimated at RO 384.8 million in 2016. This is the amount
necessary to be provided by the government to bridge the difference between the actual economic
cost of supplying electricity to consumers (estimated at RO 822.6 million in 2016) and the
revenues collected from customers (estimated at RO 437.8 million).
In effect, 47 per cent of the economic cost of supplying electricity to the MIS grid will be borne by
the government in the form of subsidy this year, the Authority noted in its Annual Report 2015.
Significantly, the underlying subsidy per kilowatt-hour (kWh) of electricity is expected to drop by
12.2 per cent this year. Explaining the rationale behind this anticipated decline, the Authority said:
“Between 2006 and 2014 the underlying economic cost of MIS supply increased by 142.3 per cent
and output (in the form of MWh supplied) by 140.4 per cent. Subsidy per kWh increased by 0.1
baiza/kWh (or 1 per cent) over the same period.
A doubling in the price of gas sold
to electricity generation plants
resulted in a significant increase in
underlying subsidy per kWh in
2015 (14.7 baiza/kWh) which is 54
per cent higher than 2014 (9.5
baiza/kWh), reflecting a 39 per
cent increase in economic cost per
kWh and no change in Permitted
Tariffs. The Authority estimates
that the underlying Subsidy per
kWh will decrease by 12.2 per cent from 14.7 baiza/kWh in 2015 to 12.9 baiza/kWh in 2016.”
On the other hand, the state-owned Rural Areas Electricity Company (RAECO), which covers
areas that fall outside the grids of the MIS and Dhofar Power, will see its subsidy receipt rise to
RO 72.6 million in 2016, up 8 per cent over the previous year’s subsidy of RO 67.4 million. The
growth in subsidy is mainly attributable to the anticipated increase in electricity output, the
regulator said.
Subsidy to the Dhofar Power System, which serves grid-connected customers in Dhofar
Governorate, is estimated at RO 38.2 million in 2016, which interestingly is 11 per cent lower than
the previous year’s subsidy of RO 42.8
million.
Of the five licensed suppliers that receive
subsidy annually, Mazoon Electricity
Company – which serves the South
Batinah, Al Dakhliyah, and North and South
Al Sharqiyah governorates – received 31.0
per cent of total subsidy of RO 454.4 million
paid out by the government last year.
Muscat Electricity was next with 23.8 per
cent of the total, followed by Majan (21.0
per cent), RAECO (14.8 per cent), and
Dhofar Power (9.4 per cent).

US: Smaller Drop In US 2016 Crude Output As Drilling Picks Up
Reuters
The U.S. Energy Information Administration said on Tuesday that it expects a smaller decline in
U.S. crude oil production in 2016 than it forecast a month ago as an uptick in drilling will lead to
more output later this year.
The agency said 2016 crude production will fall by 700,000 barrels per day (bpd) to 8.73 million
bpd, according to the EIA's short term energy outlook. Previously, it forecast a drop of 820,000
bpd to 8.61 million bpd.
The decline in crude output comes amid a two-year rout in global oil markets on the back of
lackluster demand and oversupply, effectively slashing benchmark prices by as much as 70
percent. "After a steep drop over the past year in U.S. oil production, a recent uptick in the
number of rigs drilling for oil is expected to contribute to more steady monthly oil output starting
this fall," EIA Administrator Adam Sieminski said in a statement.
Last week, U.S. drillers added oil rigs for a sixth consecutive week, according to a Baker Hughes
report, as producers continued boosting spending on expectations for higher prices in the future.
The rig count rose by 44 during July, the biggest monthly increase since April 2014.
The EIA, however, expected a slightly bigger drop in crude production in 2017 - a decline of
420,000 bpd to 8.31 million bpd, compared with last month's forecast for a drop of 410,000 bpd to
8.2 million bpd. The EIA also left its 2016 U.S. oil demand growth forecast unchanged at 160,000
bpd. It lowered its 2017 U.S. oil demand growth forecast to 100,000 bpd from 120,000 bpd
previously.

NewBase 10 August 2016 Khaled Al Awadi
NewBase For discussion or further details on the news below you may contact us on +971504822502 , Dubai , UAE
Oil stable as Venezuela calls for producer meeting, oversupply still weighs
Reuters + NewBase
Oil prices were stable early on Wednesday, with a global supply overhang weighing on markets
while talk of a potential producer meeting to discuss propping up prices lent crude some support
despite being met with scepticism by analysts.
U.S. West Texas Intermediate (WTI) crude oil futures were trading at $42.73 per barrel at 0031
GMT, down 4 cents from their last settlement, up 3 cents from their last close. International Brent
crude futures were at $45.01 per barrel, up 2 cents.
Traders said that markets were being weighed down by an ongoing supply overhang in crude and
refined fuel products, and that a suggested meeting by oil producers was unlikely to result in a
significant market tightening.
"Oil eased lower as another round of proposed production freeze talks by OPEC failed to excite
investors. An upgrade in U.S. oil production forecasts by EIA also weighed on sentiment. EIA is
now expecting U.S. output to reach 8.31 million barrels per day in 2017, up from its forecast of 8.2
million barrels per day in July," ANZ Bank said on Wednesday.
Venezuela, a member of the Organization of the Petroleum Exporting Countries (OPEC), is trying
to drum up support for a producer meeting to decide measures that would buoy oil prices.
"We are actively promoting a meeting of producers, which we estimate could take place in the
coming weeks, so that OPEC and non-OPEC countries can sit down to see what the scenario for
the winter looks like," its oil minister Eulogio del Pino said this week.
Oil price special
coverage

Despite Low Oil Prices Asian LNG Buyers May Not Go for JCC
Only Price Indexation
Although recent drop in oil prices has weakened the argument that oil-price indexing is
disadvantageous for customers, Asian buyers may be reluctant to go back to JCC-only price
indexation even with strong price review provisions in future contracts, Vivien Yang, partner with
law firm Simmons & Simmons in Hong Kong, wrote in Nikkei Asian Review on Wednesday.
The emergence of Asian LNG trading hubs will create open spot markets with prices determined
by supply and demand, similar to the oil trade, she said. “Once Asian LNG
hubs are established, they will provide more options for index pricing,
including hybrid indexation. It is very likely that the market for long-term
LNG contracts will shift toward prices based on LNG/natural gas prices in
one or more of the Asian LNG hubs.”
Asian buyers will continue to seek more flexibility in destination and resale conditions in response
to reduced demand, emergency situations, weather conditions or simply profit opportunities.
Japan's Fair Trade Commission is investigating destination restrictions and its findings could be
announced by early 2017. If the commission finds these restrictions violate Japan's fair trade laws,
that would lead to the renegotiation or ending of these restrictions in long-term contracts
governing Japanese LNG imports, Yang said adding that other Asian LNG countries could follow
suit, which could promote the development of Asian LNG hubs.
Despite the current slowdown of Asian LNG demand, Asia is likely to continue to drive the
development of the global LNG market. Asian buyers will continue entering into long-term
contracts to diversify and mitigate risks that cannot be addressed in spot trades, which include
risks arising from natural disasters, political instability, and potentially tighter supplies due to a lack
of investment resulting from low oil prices.

NewBase Special Coverage
News Agencies News Release 10 – August 2016
/Bloomberg
The World’s Energy Engine Is Slowing
Bloomberg News
China’s imports of crude oil, coal and natural gas slowed in July, offering no solace for producers
hoping demand from the world’s largest energy consumer may help mop up global gluts of the
fuels.
The nation imported about 7.35 million barrels a day last month, the slowest pace since January,
according to data Monday from the General Administration of Customs. Inbound shipments of coal
slipped 2.5 percent from June, while natural gas slumped more than 13 percent.
The July data reflects sluggish economic growth in the world’s second-largest economy and
contrasts with the country’s rising energy imports in the first six months, which added some
support to global prices. During that period, crude purchases jumped 14 percent and coal rose 8.2
percent as domestic users turned to cheaper overseas supplies as domestic production shrank.
Natural gas shipments increased 23 percent during the first half of the year.
“China’s strong appetite for crude oil and coal certainly boosted global prices in the first half of the
year,” Guo Chaohui, an analyst at Beijing-based China International Capital Corp., said by phone.
“However, we think China’s support for oil prices is weakening because of high domestic
stockpiles and sluggish demand for oil products.”
Brent crude rallied almost 90 percent to a peak in June from its 12-year low in January, before
sinking into a bear market. Liquefied natural gas spot prices in Southeast Asia have risen more

than 40 percent from their low this year in April. Prices for both are currently about 60 percent
below where they were two years ago. Coal prices at the Australian port of Newcastle, an Asian
benchmark, have increased 23 percent this year, according to data from Globalcoal.
While excess crude production abates globally, inventories are brimming and a revival in U.S.
drilling threatens to further swell supplies. Stockpiles of crude and products that built up in
industrialized nations during the years of oversupply stand at a record of more than 3 billion
barrels, according to the Paris-based International Energy Agency. Traders struggling to sell
cargoes are hoarding the most barrels on board tankers at sea since the end of the 2008-2009
financial crisis, the agency says.
“The double-digit growth in Chinese crude oil imports in the first half of 2016 was not sustainable
because real consumption is growing at low single digits” and stockpiling is slowing because of
capacity constraints, JPMorgan Chase & Co. analysts including Ying Wang wrote in a research
note on Monday.
Coal, Gas
China’s coal consumption will likely drop 3.4 percent this year amid slowing industrial activity and
the government’s efforts to switch dependency from the fuel, Citigroup Inc. said in a report last
month. The nation’s coal imports will likely ease in the third quarter along with domestic demand,
which will pressure prices in Asia, CICC’s Guo said.
Meanwhile, China’s efforts to increase its reliance on gas to help cut pollution will be slowed
because of weakening seasonal consumption. The government cut gas prices for users in
November last year, hoping to boost use of the fuel.
“China’s natural gas imports will remain subdued in the third quarter as it’s the low season for
demand,” Liu Guangbin, an analyst with Shandong-based SCI International, said by phone. “We
expect imports to rebound substantially starting from October as we’ll likely see tight supplies this
winter.” Global gas markets will remain oversupplied until 2018, and demand and supply won’t
align until 2021 as capacity to liquefy and export natural gas jumps 45 percent through 2021, the
IEA said in June.

SolarCity Growth Slows Even More as Musk Details Energy Vision
BloombergShare on FacebookShare on Twitter
SolarCity Corp. is facing near-term roadblocks as installations slow and the pending acquisition by
Tesla Motors Inc. hinders financing efforts. For billionaire Elon Musk, the long-term picture is more
significant, as he rolls out more products and services that will make the biggest U.S. rooftop solar
company a key part of his energy strategy.
SolarCity is developing a roofing product that incorporates solar technology and a storage system
that uses Tesla batteries at customers’ homes to provide power-management services to utilities.
Both will be introduced “in the coming months,” according to a statement Tuesday.
Musk, the chairman and largest shareholder of Tesla and SolarCity, has touted his vision of a
smart home powered by solar panels that charge electric cars. The new products go even further
to demonstrate how he plans to fit the companies together, creating an energy company with
broad reach that incorporates storage technology to make photovoltaic power a more important
part of the grid.
“Solar and batteries go together like peanut butter and jelly,” Musk said Tuesday on a conference
call.
SolarCity’s board agreed Aug. 1 to a reduced offer of $2.6 billion in Tesla shares, a little more
than a month after Musk made a $2.8 billion unsolicited offer for the San Mateo, California-based
company.
The pending deal delayed some financing deals for SolarCity, reducing its cash by 65 percent.
The company held held $145.7 million in cash and cash equivalents on June 30, down from
$421.4 million a year earlier.

“Because of the Tesla Motors acquisition proposal, we experienced greater-than-usual delays in
closing new project financing commitments,” Chief Executive Officer Lyndon Rive said in the
statement. At least one financing deal closed since the end of the quarter, as cash and cash
equivalents increased to $214.6 million as of Tuesday.
The deal comes as SolarCity’s growth slows. The company expects to install 170 megawatts of
panels in the current quarter, down from 201 megawatts in the second quarter. The solar
company has trimmedits growth forecast after a strategic shift in October to focus on profitability,
and its shares have slumped by more than half this year. It expects total installations of 900
megawatts to 1 gigawatt for 2016.
Tesla and SolarCity shareholders must approve the deal, which the companies expect to close in
the fourth quarter. Neither has set a date for shareholder votes.
Wider Loss
SolarCity’s net loss in the second quarter widened to $55.5 million, or 56 cents a share, from
$22.4 million, or 23 cents, a year earlier. Excluding some items, the loss was $2.32, less than the
$2.53 average of 11 analysts’ estimates compiled by Bloomberg. Sales rose to $185.8 million from
$102.8 million.
In the meantime, SolarCity is developing a roofing product that will incorporate photovoltaic
capabilities. Musk said it would appeal to homeowners who don’t like the look of rooftop systems,
as well as people with aging roofs.
“It’s a solar roof -- not a thing on the roof,” he said on the call. “If you need to replace your roof in
the next five years, you’re not going to get solar. What if your roof looks better and last longer?”
The storage service will be able to provide frequency-regulation services to utilities, by monitoring
energy flow on the grid and quickly dispatching or absorbing power when needed.
“We are releasing products our competitors just don’t have,” Rive said on the call.

NewBase For discussion or further details on the news below you may contact us on +971504822502, Dubai, UAE
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Khaled Malallah Al Awadi,
Energy Consultant
MS & BS Mechanical Engineering (HON), USA
Emarat member since 1990
ASME member since 1995
Hawk Energy member 2010
Mobile: +97150-4822502
khdmohd@hawkenergy.net
khdmohd@hotmail.com
Khaled Al Awadi is a UAE National with a total of 26 years of experience in
the Oil & Gas sector. Currently working as Technical Affairs Specialist for
Emirates General Petroleum Corp. “Emarat“ with external voluntary Energy
consultation for the GCC area via Hawk Energy Service as a UAE
operations base , Most of the experience were spent as the Gas Operations
Manager in Emarat , responsible for Emarat Gas Pipeline Network Facility &
gas compressor stations . Through the years, he has developed great
experiences in the designing & constructing of gas pipelines, gas metering & regulating stations
and in the engineering of supply routes. Many years were spent drafting, & compiling gas
transportation, operation & maintenance agreements along with many MOUs for the local
authorities. He has become a reference for many of the Oil & Gas Conferences held in the UAE
and Energy program broadcasted internationally, via GCC leading satellite Channels.
NewBase : For discussion or further details on the news above you may contact us on +971504822502 , Dubai , UAE
NewBase 10 August 2016 K. Al Awadi

New base energy news issue 904 dated 10 august 2016

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New base energy news issue 904 dated 10 august 2016